AAI Becomes Indirect Victim of Asbestos
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Published January 10, 2003

Local defense contractor was about to be sold as part of deal for its 
parent; Everything's now on hold; Minor subsidiary found itself suddenly 
facing 10,000 asbestos claims.

The employees of AAI Corp. were supposed to be working for somebody else
by now. 

The unmanned airplanes and computerized simulators they make - all 
prized by the modern military - are the envy of gobs of potential 
buyers, and AAI's bosses have been eager to make a deal. Last August, 
when management pledged to "intensify and accelerate" efforts to sell, 
analysts figured the only step left was to sign the papers and count the 
cash. 

But AAI does not have a new owner this year, despite the expectations, 
and no one is likely to buy it anytime soon. Instead, negotiations have 
stalled, the stock price of its parent company is barely half what it 
was, and none of the success at the Hunt Valley company can make its 
dilemma disappear. 

AAI's troubles, it seem, have nothing to do with its defense industry 
future, which remains promising. Rather, its problems stem from the 
long-ago past of an industrial manufacturing company in southern 
Michigan, owned by the same corporate parent as AAI, which pioneered the 
use of coal-burning furnaces for making steam power 103 years ago. 

That company - Detroit Stoker Co. - once sold products that contained 
asbestos. And the engineers, technicians, programmers, high-tech 
military specialists and the rest of the 900 employees of AAI Corp. may 
never live it down. 

"There is continued interest in the company, in the whole or some of its
parts," said James H. Perry, chief financial officer of United 
Industrial Corp., the parent company of both AAI and Detroit Stoker. 
"Clearly, though, the asbestos issue has complicated the process." 

Defense industry watchers often forget the name United Industrial Corp. 
Based in a small Manhattan office, far removed from any of the engineers
or factory


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